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UPDATE: Affymetrix s New Subsidiary to Link Genetic Variations to Disease

This story has been updated from a previous version with comments and details from Affymetrix executives.

NEW YORK, Oct 3 – Fresh off its agreement to acquire computational genomics company Neomorphic, DNA chipmaker Affymetrix (Nasdaq: AFFX) said Tuesday it had formed a new genomics subsidiary, Perlegen Sciences, to identify genetic variations and link them to disease.  

Affymetrix, which hopes to raise approximately $100 million in third party financing to support Perlegen, said it intends to retain a “substantial equity position,” in the new company.

With exclusive access to its Affymetrix’s DNA scanning technology, Perlegen intends to initially scan 50 genomes in order to gather a host of information that would allow researchers to link patterns in genetic variation with disease.  

“The initial objective of Perlegen is to use Affymetrix’s technology to scan the human genome 50 times and make a database from that,” Affymetrix’s CFO, Edward Hurwitz, told an investors conference sponsored by ING Barings in New York.

Perlegen said that by scanning dozens of genomes, it would be able to identify variations between individuals, discover genome-wide patterns of variation, find associations between haplotypes and health, and unravel the biology underlying those associations to develop drugs and diagnostics.   

“We are growing through an entire genome to find fundamental patterns rather than looking at particular genes for variants,” said Perlegen’s scientific director, David Cox, who was formerly co-director of Stanford University’s Genome Center.

Other companies such as DNA Sciences and Framingham Genomics are also aiming to analyze individual samples of DNA in order to generate valuable SNP data for use in the development of drugs and diagnostics.  

Hurwitz noted that by searching for SNPs rather than sequencing entire genomes, Perlegen’s researchers would be able to accelerate the process of uncovering genomic variations.

“A scientist using one of the scanners is the equivalent of using 100 3700 sequencers,” Hurwitz said, referring to Applied Biosystems’ (NYSE: PEB) ABI Prism 3700 DNA sequencers .  

Affymetrix will then include the haplotypes Perlegen uncovers in its DNA chips.

“Affy will supply the wafer to Perlegen [and] Affy will have the exclusive right to put the data on its chips,” he said. “We felt that this was the most aggressive and straight-forward way to grow this business.”

  Affymetrix will not, however, have the exclusive right to the associations that Perlegen uncovers. Rather, Perlegen intends to leverage the associations in any deal it may form with a pharmaceutical company.

Affymetrix did not say when Perlegen would begin scanning the genomes.

Shares of Affymetrix, which is based in Santa Clara, Calif., were up 2 3/16, or 4.7 percent, to 49 1/4 in late afternoon trading.

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